The gross domestic product of Hungary was up by 4.4% in the first quarter of 2018, year-on-year, according to raw data in a flash estimate released Tuesday by the Central Statistical Office (KSH). The main contributors to growth were market-based services, especially trade and tourism.
According to seasonally and calendar-adjusted and reconciled data, the volume of GDP increased by 4.7% in Q1 2018 compared to the corresponding period of the previous year, the KSH revealed.
Compared to the preceding quarter, the volume of GDP grew by 1.2% – again according to seasonally and calendar-adjusted and reconciled data – in the first quarter of 2018.
Speaking on public television after the release of the data, Minister for National Economy Mihály Varga said the economy has remained on a growth path despite unfavorable weather and fewer working days. Growth in the tourism sector has been in the double digits for years, although increases were moderate in the farm and industrial sectors, he told state news channel M1.
Varga also counted home construction among the engines of growth during the period.
Analyzing the data, CIB Group concurred that Q1 growth was supported by market-based services to the greatest extent, similarly to the preceding two quarters, and this included the outstanding performance of trade and tourism. Based on monthly data, overall GDP growth probably remained broad-based, with strong domestic demand and growing consumption by households, CIB added.
In addition to local factors, the role of the European boom is also significant, although the German economy delivered a first-quarter performance weaker than Q4 2017 and short of expectations. At the same time, Hungary’s regional peers also showed growth rates at or above 4%, CIB noted.
In 2018 it is likely that overall growth will remain significant, but potentially less dynamic than in 2017, the analysis said. Based on consensus calculations, the average expectation of market players suggests full-year 2018 growth close to 3.8%, it concluded. This compares to the Hungarian governmentʼs full-year target of 4.3%.
Cited by state news agency MTI, TakarékBank analyst Gergely Suppan said growth in the coming quarters could be lifted by a wave of home and office building completions, EU-supported investments and continued strong consumption. TakarékBank is raising its forecast for full-year growth from 4.5% to 4.6%, he added.
ING Bank chief analyst Péter Virovácz said wage increases may have contributed to the strong Q1 growth, adding that new industrial capacity could boost growth in the coming quarters. ING Bank has raised its forecast for 2018 GDP growth to 4%, he said.
Detailed information on the structure of GDP growth will be published by the KSH together with a second estimate of the quarterly growth figure on June 5.